How much must you invest at 8% interest in order to see your investment grow to $8,000 in 10 years?
A)$3,070
B)$3,704
C)$3,105
D)None of these options

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to solve this problem:

A = P(1 + r/n)^(nt)

Where:
A = final amount (given as $8,000)
P = principal amount (what we are trying to solve for)
r = annual interest rate (8%)
n = number of times interest is compounded per year (let's assume annually)
t = time in years (10)

Plugging in the values we know:

$8,000 = P(1 + 0.08/1)^(1*10)

Simplifying:

$8,000 = P(1.08)^10

$8,000 = 2.1589P

P = $3,704.22 (rounded to the nearest penny)

Therefore, we would need to invest $3,704.22 at 8% interest to see the investment grow to $8,000 in 10 years. The best choice is B.

How Much Must You Invest at 8% Interest in Order